It was more of an interface, allowing communication and (Very dodgy) inventory sharing, so not an ideal solution by any means. However, I do believe that a protocol translator has merit, though it would require a great deal of work.
The issue regarding differences in blocks could be handled in a similar way to what Spoutcraft did, in that block types that aren’t available in a game appear as another block with similar properties that is in the game, which to my knowledge could be done primarily through protocol translation with minimal overhead. Of course, building the translator is a great deal of effort, though I would very much like to see it done, it will require other developers to make, as it won’t be handled by the Sponge team.